Question: Preparing operating activities cash flow—direct method
The accounting records of Four Seasons Parts reveal the following:
Payment of salaries and wages $ 34,000
Net income $ 21,000
Depreciation expense 10,000
Payment of income tax 16,000
Payment of interest 17,000
Collection of dividend revenue 5,000
Payment of dividends 5,000
Payment to suppliers 51,000
Collections from customers 116,000
Compute cash flows from operating activities using the direct method for the year ended December 31, 2018.
Net cash provided by operating activities is $3,000.
Cash flows from operating activities
Collection from customers
Collection of dividend revenue
For income tax
Net cash provided by operating activities
Net income is used while preparing cash flow statement by indirect method.
Preparing the direct method statement of cash flows Red Toy Company reported the following comparative balance sheet:
1. Compute the collections from customers during 2018 for Red Toy Company. Sales Revenue totaled $134,000.
2. Compute the payments for inventory during 2018. Cost of Goods Sold was $79,000.
Preparing the statement of cash flows—direct method The income statement and additional data of Value Corporation follow:
Boundary Rare Coins (BRC) was formed on January 1, 2018. Additional data for the year follow:
Computing operating activities cash flow—indirect method
The records of Vintage Color Engraving reveal the following:
Net income $ 36,000
Depreciation expense $ 5,000
Sales revenue 53,000
Decrease in current liabilities 19,000
Loss on sale of land 4,000
Increase in current assets other than cash 10,000
Acquisition of land 35,000
Compute cash flows from operating activities by the indirect method for year ended December 31, 2018.
Using a spreadsheet to prepare the statement of cash flows— indirect method The 2018 comparative balance sheet and income statement of Attleboro Group, Inc. follow. Attleboro disposed of a plant asset at book value in 2018.
Prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activities by the indirect method. A plant asset was disposed of for $0. The cost and accumulated depreciation of the disposed asset was $13,600. There were no sales of land, no retirement of common stock, and no treasury stock transactions. Assume plant asset and land acquisitions were for cash.
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